A 10-Point Primer on Income-Based Repayment (Part 1 of 2)
One of the greatest difficulties for people seeking bankruptcy relief in Las Vegas is student loans.
Due to Congressional action in 1998 and 2005, federally backed and then private student loans became subject to the “undue hardship” exception to dischargeability. Practically speaking, this means the debtor must show the bankruptcy court that there is no hope they will ever be able to work again to pay off the debt. Thus, those who should be able to obtain a fresh start in bankruptcy may not be able to do so.
Fortunately, recent changes in student lending laws make it easier for student debtors to pay their loans to the government based on their incomes, called Income-Based Repayment (IBR).
Here are some important things student debtors need to know about the program:
1). The following types of loans (both under the Direct Loan and FFEL Program) are eligible for consolidation into an IBR plan:
a). Stafford Loans
b). PLUS Loans
c). Consolidation Loans
2). The following student loans are ineligible for IBR:
a). Parent PLUS Loans
b). Consolidation Loans repaying Parent PLUS Loans
c). Loans in default.
3). IBR applies to loans issued before and after 2009 and for any type of education, undergraduate, graduate, professional, etc.
4). The U.S. Department of Education uses income, family size, and state of residence to calculate monthly IBR payments. If the calculation is below your current monthly payment rate, then you will be eligible for IBR.
5). Married people who file joint federal tax returns can have their spouses’ IBR-eligible student loans included in the repayment calculation, so if you and your spouse both have IBR-eligible loans, then if both of your monthly payment rates are above the IBR calculation, then you are both eligible for IBR.
IBR provides student debtors with many benefits even though they are often unaware of its existence. An experienced Las Vegas Bankruptcy attorney can help you sort out all of your debt problems in more ways than merely filing bankruptcy.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Freedom Law Firm Las Vegas bankruptcy attorney for a free initial consultation by calling us at 702-903-1354.